Congratulations, you’re about to (maybe, hopefully, possibly) become a homeowner! There’s a lot to do and a lot at stake, and much of what happens before you get the keys depends on your credit history. What you’ve spent, how you’ve paid (or ignored) your bills, how much credit you’ve used and how wisely determines more than just a “yes” or “no” from the lender. Your credit history determines your loan’s interest rate and monthly payment, which in turn influence the money you have to spend on other things, such as furniture to fill your new place, utilities to heat, light and cool it and groceries to feed the family and friends who visit. Here is what to look for before you get your mortgage.

Before the first month’s payment: three ways to hone your credit history

1) Read your credit reports

Your lender is going to check your credit history by contacting the three reporting agencies: Equifax, TransUnion and Experian. Get ahead of your lender by pulling your own set of reports and reviewing them line by line. Look for mistakes and discrepancies including outstanding debts long paid off, credit cards and bank accounts fraudulently opened in your name, outdated credit limits and incorrect personal demographic information. The Fair Credit Reporting Act allows you to contact the agencies and get the information fixed. Mistakes mean you pay more interest and higher monthly payments, if you get the loan at all.

2) Bring down those balances

One-third of your FICO credit score (the one most commonly cited by lenders) is based on your card balances versus your credit limits at the time of your mortgage application. Help yourself achieve your housing goal by paying down your balances and waiting one payment cycle for the creditors to report the updated reduced balances to the reporting agencies. Once the credit balances reflect the reductions, apply for your mortgage, your chances for a higher FICO score increase, along with the possibility of a lower interest rate and monthly payment.

3) No window-shopping for new debt

There are many tempting credit card offers in your digital and postal mailbox, offering fantastic rates, rewards and balance transfer opportunities. Avoid the application temptation; hit DELETE or shred the envelopes unopened. Every application creates a hard inquiry into your finances, which potentially lowers your credit score. And every approved card is another chance to spend money you’re saving for that new home.

The Credit Care Company offers individuals and businesses assistance with credit repair solutions. From help with student loan debt and rebuilding credit to debt settlement and business funding, our banking, mortgage, credit and legal experts work with you as a team to recover and restore your financial life. Contact us for more information and a free consultation.